UNFAIR PREJUDICE/OPPRESSION PETITIONS

An unfair prejudice petition is usually a remedy for minority oppression, especially

within smaller companies such as unlisted small and medium sized enterprises. The usual grounds for an unfair prejudice petition are (1) a conduct of the affairs of the company in an unfairly prejudicial manner and (2) a corporate act or omission which is or would be unfairly prejudicial.

The concept of unfair prejudice is wide and should therefore be applied flexibly to meet the circumstances of the particular case. The categories of conduct which may amount to unfairly prejudicial conduct are, inter alia, the following:

• exclusion from management in circumstances where there is a (legitimate) expectation of participation;
• the diversion of business to another company in which the majority shareholder holds an interest;
• the awarding by the majority shareholder to himself of excessive financial benefits; and
• abuses of power and breaches of the Articles of Association.

The subject of unfair prejudice is admittedly a complex area and this guide should not be considered as a substitute of a detailed advice, depending on your case. For any further information and/or assistance, contact us at info@pirilides.com.